Post-Alice Software Patent Decision, Content Extraction and Transmission v Wells Fargo, Federal Circuit, Dec. 2014

CET owns patents that generally recite a method of 1) extracting data from hard copy documents using an automated digitizing unit such as a scanner, 2) recognizing specific information from the extracted data, and 3) storing that information in a memory. This method can be performed by software on an automated teller machine (ATM) that recognizes information written on a scanned check, such as the check’s amount, and populates certain data.

One of the claims recites:
A method of processing information from a diversity of types of hard copy documents, said method
comprising the steps of:
(a) receiving output representing a diversity of types of hard copy documents from an automated digitizing unit and storing information from said diversity of types of hard copy documents into a memory, said
information not fixed from one document to the next, said receiving step not preceded by scanning, via said automated digitizing unit, of a separate document containing format requirements;
(b) recognizing portions of said hard copy documents corresponding to a first data field; and
(c) storing information from said portions of said hard copy documents corresponding to said first data field into memory locations for said first data field.

The Federal Circuit said that The Supreme Court’s two-step framework, described
in Mayo, and in Alice Corp. Pty Ltd. v. CLS Bank Int’l guided their analysis.

Using that analysis, the court is to first determine whether a claim is “directed to” a patent-ineligible
abstract idea. If so, they are then to consider the elements of the claim—both individually and as an ordered combination—to assess whether the additional elements transform the nature of the claim into a patent-eligible application of the abstract idea. This is the search for an “inventive concept”—something sufficient to ensure that the claim amounts to “significantly more” than the abstract idea itself.

The Federal Circuit noted that The Supreme Court has not delimited the precise contours of the ‘abstract ideas’ category.

Applying Mayo/Alice step one, the Federal Circuit agreed with the district court that the claims of the asserted patents are drawn to the abstract idea of 1) collecting data, 2) recognizing certain data within the collected data set, and 3) storing that recognized data in a memory. The concept of data collection, recognition, and storage is undisputedly well-known.

CET attempted to distinguish its claims from those found to be abstract in Alice and other cases by showing
that its claims require not only a computer but also an additional machine—a scanner. CET argued that its claims are not drawn to an abstract idea because human minds are unable to process and recognize the stream of bits output by a scanner. However, the Federal Circuit did not accept that argument and noted that claims in Alice also required a computer that processed streams of bits, but nonetheless were found to be abstract.

For the second step of the analysis, the court must determine whether the limitations present in the claims represent a patent-eligible application of the abstract idea. For the role of a computer in a computer implemented invention to be deemed meaningful in the context of this analysis, it must involve more than performance of well-understood, routine, and conventional activities previously known to the industry.

Applying Mayo/Alice step two, the Federal Circuit agreed with the district court that the asserted patents contain no limitations—either individually or as an ordered combination—that transform the claims into a patent-eligible application. CET conceded at oral argument that the use of a scanner or other digitizing device to extract data from a document was well-known at the time of filing, as was the ability of computers to translate the shapes on a physical page into typeface characters.

According to the Federal Circuit, CET’s claims merely recite the use of this existing scanning and processing technology to recognize and store data from specific data fields such as amounts, addresses, and dates.
There is no “inventive concept” in CET’s use of a generic scanner and computer to perform well-understood,
routine, and conventional activities commonly used in industry. At most, CET’s claims attempt to limit the abstract idea of recognizing and storing information from hard copy documents using a scanner and a computer to a particular technological environment. Such a limitation has been held insufficient to save a claim in this context.

CET argued that the failure of PNC or the district court to individually address every one of its claims is inconsistent with the statutory presumption of validity that requires proving the invalidity of each claim by clear and convincing evidence.

The Federal Circuit did not accept that argument. They said that the district court correctly determined that addressing each claim of the asserted patents was unnecessary. After conducting its own analysis, the district court determined that PNC is correct that claim 1 of the ’855 patent and claim 1 of the ’416 patent are representative, because all the claims are “substantially similar and linked to the same abstract idea.”

CET contended that the district court erred by declaring its claims patent-ineligible under § 101 at the
pleading stage without first construing the claims or allowing the parties to conduct fact discovery and submit
opinions from experts supporting their claim construction positions. The Federal Circuit did not accept this argument. They stated that although the determination of patent eligibility requires a full understanding of the basic character of the claimed subject matter, claim construction is not an inviolable prerequisite to a validity determination under § 101.

The Federal Circuit affirmed the district court’s grant of PNC’s motion to dismiss on the ground that the
claims of CET’s asserted patents are invalid as patent ineligible under § 101.

Thus, a scanner; i.e., some computer hardware beyond a computer is not enough to convert a patent-ineligible software claim to a patent-eligible claim after Alice.